Independence, First Eastern Earnings Rise

Independence Bancorp and First Eastern Corp. -- bank-holding companies with offices in the region -- yesterday reported increases in net income for the three months ended June 30.

Perkasie-based Independence, the parent company of Lehigh Valley Bank in Bethlehem and Bucks County Bank and Trust Co. -- also declared a quarterly dividend of 29 cents per share, payable Aug. 10 to stockholders of record on July 30.

FOR THE RECORD - (Published Friday, July 23, 1993) Wilkes-Barre-based First Eastern Corp. has an office in Lehighton and in Nazareth. The company's presence in the Lehigh Valley was reported incorrectly in a story yesterday in The Morning Call.

Independence earned $5.8 million for the second quarter, a 16.9 percent increase from the same period a year ago; earnings per share were 50 cents, up 6 cents.

The second-quarter earnings outperformed Wall Street expectations of 47 to 48 cents per share, according to industry analysts.

"This was a very good quarter. All engines are running," said Richard Lawrence, an analyst with Janney Montgomery Scott in Philadelphia.

He noted that the net interest margin increased slightly and that loan-loss provisions were in line with expectations.

"They do have some asset-quality problems but they are working out of them," Lawrence said. "Everything is in line."

Profits for the first half of the year were $11.03 million, down $2.67 million from last year, although 1992 performance benefited from a federally mandated accounting change. Operating profits for the first half of '93 were up 18.3 percent from 1992.

Company spokesman Gary A. Kimball said a 9 percent increase in non-interest income and a 10 percent drop in provisions for bad loans were big factors in Independence's quarterly performance.

The earnings "were consistent with our goals," Kimball said.

Independence also owns Cheltenham Bank and Third National Bank and Trust Co. of Scranton. Company stock closed at $25.50 yesterday in over-the-counter trading, up 50 cents from Tuesday.

FIRST EASTERN

Wilkes-Barre-based First Eastern Corp. -- which operates 13 branches of First Eastern Bank (formerly Northeastern Bank of Pennsylvania) in the Lehigh Valley -- earned $398,000, 3 cents per share, for the second quarter, compared to a loss of $7.6 million for the same three months last year.

Frederick A. Deal, president and chief executive officer, noted that earnings for the quarter were enhanced by securities gains of $9.1 million, compared with $2.4 million in the comparable period last year. If adjusted for securities gains, core operating income remained at the same level as last year.

Quarterly earnings were substantially less than industry analysts predicted -- a mean estimate of three analysts surveyed by Zacks Investment Research was 10 cents a share. Analysts who follow First Eastern did not return telephone calls yesterday.

Net income for the first half of the year was $1.15 million, compared to a $14.32 million loss in 1992.

In the second quarter, First Eastern increased its provision for bad loans by $5 million more than the budgeted amount, he said.

The corporation implemented a profit improvement plan in February that included four goals: reduce the size of the bank to meet capital requirements; meet capital requirements by raising outside monies; reduce expenses in concert with trimming the bank's size; and improve asset quality.

Deal said the plan has been completed and that First Eastern expects to realize lower operating expenses in the second half of the year.

First Eastern Corp. and its principal subsidiary, First Eastern Bank, N.A., serves a nine-county region in northeast Pennsylvania. Company stock closed at $18.25 yesterday in over-the-counter trading, unchanged from Tuesday.